Deadlock Resolution in Private Companies in the UAE: A Comparative Study
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Date
2025-03
Authors
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Publisher
The British University in Dubai (BUiD)
Abstract
This doctoral research study aims to preserve the integrity, continuity, and value of deadlocked private companies for the benefit of companies, joint ventures, shareholders, employees, third-party contractors, and the wider UAE economy and its investment regime. To achieve this, the study assesses the extent to which the UAE federal mainland legal system is equipped to provide sustainable legal solutions to shareholders’ deadlock in private companies. The research objective is to identify gaps in the studied legal systems by assessing what rights, relevant to a deadlock scenario, minority and majority shareholders have in a company, and the extent to which interests of such shareholders groups, the company, other stakeholders, need to be balanced, looking at it through the lens of modern and comprehensive stakeholders’ and public interest regulation theories. This study assesses whether and how the UAE Federal Commercial Companies Law (CCL), and the UAE courts deal with such deadlocks and disputes, and the viability of any existing statutory solutions. The research compares such solutions in the UAE, to the extent that they exist, with deadlock-preventive, deadlock-breaking and termination mechanisms offered or practiced under the UK law. Specifically, the study assesses the role of legal tools, such as shareholders’ agreements and their validity and viability to exit a shareholder from a deadlocked company. In doing so, the research analyses the importance and role of shareholders' agreements and their relevant exit clauses, and the extent to which these clauses can be legitimate and enforceable under the UAE legal system, compared to that of the UK. The study explores the appropriate deadlock resolution mechanisms that can work in the UAE legal system. It also aims to provide academic and practical guidance on important problems to benefit shareholders, directors, companies, lawyers, and legislators. It further aims to advance policy and legislative recommendations that will fill the existing gaps including amendments to the UAE CCL and practice that help improve the legal framework of the research problem. The study applies a qualitative doctrinal method built on an interpretive research paradigm required to comprehend the status quo of the topic through scholarly, critical, and comparative analysis of publicly available laws, case laws, and literature. The critical comparative analysis approach is applied between the primary UAE mainland legal system and that of the UK to objectively determine what approach is taken to address the research problem in the UAE and the UK. In addition, the research benefits from qualitative non-doctrinal semi-structured interviews with carefully selected senior lawyers, shareholders, and directors of private companies. The views were gathered and analysed to validate study outcomes and recommendations.
Description
This doctoral research study aims to preserve the integrity, continuity, and value of deadlocked private companies for the benefit of companies, joint ventures, shareholders, employees, third-party contractors, and the wider UAE economy and its investment regime. To achieve this, the study assesses the extent to which the UAE federal mainland legal system is equipped to provide sustainable legal solutions to shareholders’ deadlock in private companies. The research objective is to identify gaps in the studied legal systems by assessing what rights, relevant to a deadlock scenario, minority and majority shareholders have in a company, and the extent to which interests of such shareholders groups, the company, other stakeholders, need to be balanced, looking at it through the lens of modern and comprehensive stakeholders’ and public interest regulation theories. This study assesses whether and how the UAE Federal Commercial Companies Law (CCL), and the UAE courts deal with such deadlocks and disputes, and the viability of any existing statutory solutions. The research compares such solutions in the UAE, to the extent that they exist, with deadlock-preventive, deadlock-breaking and termination mechanisms offered or practiced under the UK law. Specifically, the study assesses the role of legal tools, such as shareholders’ agreements and their validity and viability to exit a shareholder from a deadlocked company. In doing so, the research analyses the importance and role of shareholders' agreements and their relevant exit clauses, and the extent to which these clauses can be legitimate and enforceable under the UAE legal system, compared to that of the UK. The study explores the appropriate deadlock resolution mechanisms that can work in the UAE legal system. It also aims to provide academic and practical guidance on important problems to benefit shareholders, directors, companies, lawyers, and legislators. It further aims to advance policy and legislative recommendations that will fill the existing gaps including amendments to the UAE CCL and practice that help improve the legal framework of the research problem. The study applies a qualitative doctrinal method built on an interpretive research paradigm required to comprehend the status quo of the topic through scholarly, critical, and comparative analysis of publicly available laws, case laws, and literature. The critical comparative analysis approach is applied between the primary UAE mainland legal system and that of the UK to objectively determine what approach is taken to address the research problem in the UAE and the UK. In addition, the research benefits from qualitative non-doctrinal semi-structured interviews with carefully selected senior lawyers, shareholders, and directors of private companies. The views were gathered and analysed to validate study outcomes and recommendations.
Keywords
deadlock solutions and mechanism, private companies, UAE companies law, shareholders’ agreement, exits clauses, deadlock breaking and termination